Friday, August 11, 2017

Geopolitical crisis

Many times no action is the best action. It applies here.  I had my experience in selling too many stocks via stops in 911. The market returned in a few days and I did not buy them back.

An analysis from Ned David Research covers 51 events from 1900 to 2014. My interpretation for actions: Trade the affected sector (via sector ETF) in the first few days and reverse the trade 2 months after. Many times it means the oil price and gold price would rise.

I bought SH (a contra ETF to SPY) in August, 2017 as August and September are statistically the worst months in addition to the high risk in the current market.  It is expected to be sold in Nov. 1. The North Korea crisis did not do much to the market on the first day but the market (S&P 500) lost 1.45% and the risky NASDAQ lost 2.13% (see my blog on FAANG) on the second day.
Caveat. Need to understand the crisis. If it would lead to World War 3, most sectors will not recover for a long while. Again, there is no sure thing in investing otherwise there would be no poor folks. However, educated guesses should materialize more often than not.

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